Consumer Confidence Eases in July as Home Prices Keep Rising — Evening Brief – 07.28.26
U.S. consumer confidence declined modestly in July as Americans grew less optimistic about current business conditions and the labor market, while home prices continued to edge higher despite affordability challenges posed by elevated mortgage rates and persistent inflation.
The Conference Board’s Consumer Confidence Index fell to 90.8 in July from a revised 92.2 in June, missing economists’ consensus estimate of 92.3, according to data released Tuesday. June’s reading was revised higher from an initially reported 91.2.
“Consumer confidence moderated slightly in July, continuing a general downward-sloping trajectory since late 2021,” said Dana M. Peterson, chief economist at The Conference Board. “Consumer appraisals of current business conditions and, to a lesser extent, perceptions of the current labor market both softened.”
The Present Situation Index declined 3.6 points to 114.9, marking its third consecutive monthly decrease. Meanwhile, the Expectations Index, which measures consumers’ six-month outlook, was unchanged at 74.7, remaining below the threshold that has historically signaled elevated recession risk.
Peterson noted that consumers expect little improvement in business conditions over the next six months, although expectations for the labor market became slightly less pessimistic. Household income expectations moderated but remained positive overall.
Housing data released Tuesday painted a mixed picture. The S&P CoreLogic Case-Shiller 20-City Home Price Index, seasonally adjusted, increased 0.2% in May from the prior month, exceeding expectations for no change. On an annual basis, the unadjusted 20-city index rose 1.6%, topping the 1.4% consensus forecast.
“Affordability remains a significant headwind for the housing market,” said Rebecca Kaufman, associate director of commodities at S&P Dow Jones Indices. She noted that 30-year mortgage rates climbed to 6.5% in May, while elevated inflation continued to weigh on prospective homebuyers.
Separately, the Federal Housing Finance Agency House Price Index rose 0.3% in May following a 0.1% decline in April, exceeding expectations for a flat reading. Home prices increased 2.2% year over year, with regional performance varying widely, from a 0.6% monthly decline in the Pacific division to a 1.4% gain in the East South Central region.